How Much Are You Paying in Taxes?
But what truly amazes me about this is that in searching on this article in Google News, I couldn't find any article that directly questions this "80 to 90%" tax rate assertion. There's some push back in the comments section in this Accounting Today article, but no one seems to be able to actually sit down and work out the numbers. Innumeracy reins supreme! And then there's that bizarre mentions of "estate" taxes. So this blog post can be considered a public service - the only refutation of Mr. Golub's article in the webosphere that actually looks at numbers. As I write this it occurs to me he might also be paying some serious real-estate taxes - and perhaps he's counting that in his equation (and what he means by "estate" taxes?).
Apparently the way it works in NYC is that property taxes on single-family dwellings are 17% of 6% of assessed market value. It sounds like these valuations are rather dodgy in themselves, but let's assume he owns a $10 million dollar unit (I'm guessing he pays little property taxes on his "golf" homes in New Mexico and Florida). So that would work out to about $102k per year.
So, if that property tax explains the "80 to 90%" tax rate (let's call it 85%), then we have
.85Y = .44Y + 102which equals Y = $248. So if his property is worth $10m, that means his income could only be $248k. Generally, his ~85% tax rate is possible if his NYC property is 40 times greater than his income. Maybe he should move.